A contractor’s Chart of Accounts (COA) must be set up to track unallowable costs separate from any indirect cost pool per FAR 31.205.  For direct unallowable/unbillable costs, contractors need to develop a coding system to identify allowable direct costs separate from unallowable direct costs (ie travel costs in excess of JTR limits).

Unallowable costs should be excluded from any applicable indirect cost pool but must remain in the base of any indirect cost pool in order to receive its fair share of any indirect cost allocation it should have.

It is recommended that contractors:

·    Develop a written policy regarding unallowable costs, the process by which all costs are to be measured against the FAR Part 31.205 Selected Cost clauses, the process by which they are to be identified, and what accounts they are to post against.

·    A list of typical unallowable cost groupings may include but are not limited to: gifts, souvenirs, alcoholic beverages, entertainment, public relations/advertising costs, etc.

·    These unallowable costs are very specific and may be based on facts and circumstances of a particular situation

FAR 31.205 1  Public Relations and Advertising Costs

FAR 31.205 2  Automatic Data Processing Equipment Leasing costs

FAR 31.205 3  Bad Debts

FAR 31.205 4  Bonding Costs

FAR 31.205 5  Civil Defense Costs

FAR 31.205 6  Compensation for Personal Services

FAR 31.205 7  Contingencies

FAR 31.205 8  Contributions or Donations

FAR 31.205 9  Reserved

FAR 31.205 10 Cost of Money (CAS 414/417) (also see 31.205 52)

FAR 31.205 11 Depreciation (CAS 404/409) (also see 31.205 16 and 31.205 52)

FAR 31.205 12 Economic Planning Costs (also see 31.205 27)

FAR 31.205 13 Employee morale, health, welfare, food service, and dormitory costs and credits

FAR 31.205 14 Entertainment costs

FAR 31.205 15 Fines, penalties and mischarging costs

FAR 31.205 16 Gains and losses on disposition or impairment of depreciable property or other capital assets (also see 31.205 11)

FAR 31.205 17 Idle facilities idle capacity costs

FAR 31.205 18 IR &D and B&P Costs (CAS 420)

FAR 31.205 19 Insurance and indemnification (CAS 416)

FAR 31.205 20 Interest and other financial costs

FAR 31.205 22 Lobbying and political activity costs

FAR 31.205 23 Losses on other contracts

FAR 31.205 24 Maintenance and repair costs

FAR 31.205 25 Manufacturing and production engineering costs

FAR 31.205 26 Material costs

FAR 31.205 27 Organization costs

FAR 31.205 28 Other business expenses

FAR 31.205 29 Plant protections costs (generally allowable)

FAR 31.205 30 Patent costs

FAR 31.205 31 Plant reconversion costs

FAR 31.205 32 Precontract costs

FAR 31.205 33 Professional and consultant service costs

FAR 31.205 34 Recruitment costs

FAR 31.205 35 Relocation costs

FAR 31.205 36 Rental costs

FAR 31.205 37 Royalties and other costs for use of patents

FAR 31.205 38 Selling costs

FAR 31.205 39 Service and warranty costs

FAR 31.205 40 Special tooling and special test equipment

FAR 31.205 41 Taxes

FAR 31.205 42 Termination costs

FAR 31.205 43 Trade, Business, Tech Professional costs

FAR 31.205 44 Training educational costs

FAR 31.205 46 Travel costs

FAR 31.205 47 Cost of Legal and other Proceedings

FAR 31.205 48 Deferred research and development costs

FAR 31.205 49 Goodwill

FAR 31.205 50 Executive lobbying costs

FAR 31.205 51 Costs of alcoholic beverages

FAR 31.205 52 Asset valuations resulting from business combinations

Please reference for more detailed information to each subpart;

http://www.dcaa-assist.com/dcaa-price-proposal-audits.htm